Colin MacNaught might be the most important official in Massachusetts public finance you don’t know. For seven years, he has worked behind the scenes, as assistant state treasurer for debt management under three treasurers, overseeing the Commonwealth’s $22 billion in outstanding borrowings. MacNaught, 41, is leaving at the end of March to rejoin the private sector. He recently spoke with Globe reporter Beth Healy to talk about some of the highlights of his timeworking for the state.
1In his first year with the state, in 2008, MacNaught experienced the full weight of the financial crisis: the fall of the Wall Street firm Bear Stearns, the federal takeover of mortgage giants Fannie Mae and Freddie Mac, looming bank failures, a freeze in a segment of the bond market, and the bankruptcy of Lehman Brothers.
“I feel like I’ve been in a crouch for seven years, preparing for the worst,” MacNaught said. On the Friday before Lehman filed for bankruptcy protection, “I sent a member of my team to Lehman Brothers’s office and had them release us from the contracts we were in. We were just preparing for the worst. They didn’t survive, but Monday morning we were fine.
“It’s been an amazing seven years. It’s billions of dollars, and if you make a mistake on a bond, it’s on the books for 30 years.”
2MacNaught is leaving the state with its best debt ratings ever, which saves the state millions of dollars in borrowing costs.
“S&P upgraded us to AA+ in September 2011. We were very proud — they had just downgraded the US debt. We’re now at the highest set of ratings the state has ever had. You think about the long-term trend in Massachusetts. In the 1990s, the state was in the [much lower] BBB category.”
3The state’s bond ratings from all three of the major agencies are just one step below AAA. Why can’t Massachusetts get the top grade?
“The factor that’s holding us back is the high debt burden. We have a lot of debt. The 1980s was really dominated by the harbor cleanup. The ’90s was dominated by the Big Dig. The early 2000s was a lot of school construction with the creation of the school building authority. The decade ahead, I guess, is going to be dominated by transportation. We have as much debt outstanding as Microsoft.”
4The Milton native received a scholarship to play baseball at Oral Roberts University in Oklahoma. A right-handed pitcher, he went on to play two years of pro ball in independent leagues and dreamed of playing for the Red Sox.
“By the time I was done, age 23, I felt like I’d already had a career. I had negotiated my own contract. It was 40 hours or more a week. It was business travel. I think I’ve been to every small town in the Midwest.”
5While earning his master’s degree in public policy at Harvard’s Kennedy School, MacNaught researched and wrote his thesis on creating the state’s School Building Authority and funding it through the sales tax, under Governor Mitt Romney.
“They’ve issued a lot of money and rebuilt hundreds of schools across the state.’’Beth Healy can be reached at email@example.com. Follow her on Twitter @HealyBeth.